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Willingness to Sell Isn’t Evidence of Bad Faith

It is a common practice for brand owners to send a demand letter to a domain owner suspected of infringement. This can sometimes result in the parties negotiating a sale of the domain. However, if negotiations break down, the brand owner may decide to proceed with a Complaint against the domain owner. It is important to understand how these negotiations can and can’t be used in an effort to show the domain owner’s bad faith. For example, if the reply to the brand owner’s demand letter is, “Pay me $10,000 for this domain,” this could very well end up as Exhibit A in a UDRP Complaint to show the domain owner’s intent to sell the domain for a huge profit. However, if the domain owner requests that the brand owner make an offer, the brand owner may not be able to use any subsequent correspondence as evidence, especially if it only shows that the domain owner is negotiating within a reasonable range of the brand owner’s offer. The bottom line is that UDRP Panelists may not view as bad faith a situation where a brand owner actively participates in a negotiation, or intentionally encourages a domain owner to request a very high sale price. Murad, Inc., the Complainant in a UDRP Complaint with the National Arbitration Forum (NAF), recently discovered this first hand.

Murad, Inc., the maker of well-known skincare products and nutritional supplements, filed its Complaint against Stacy Brock over the domain name InclusiveHealth.com. Murad, Inc. began using the INCLUSIVE HEALTH trademark in 2003 and filed a trademark application for the mark in 2006, shortly after the Respondent registered the disputed domain. Since the registration, the domain has remained unused; however, the Respondent presented evidence to support future plans for using the domain as a site on which to aggregate her research, teaching, and presentations in public health and health policy.

The Complainant alleged that the Respondent had offered to sell the disputed domain to the Complainant on two prior occasions, first for $9,000 and again, more than a year later, for $50,000. In both instances, however, it was the Complainant that had initiated the negotiations for the sale of the domain. The Respondent argued that because the Complainant had in fact initiated the offers, there was no evidence of bad faith. Drawing on previous decisions, the Panel agreed with the Respondent, noting, “…when a Complainant initiates an offer for the sale of a disputed domain name, a Respondent’s willingness to engage in negotiations for the sale of the domain name does not equate to bad faith.”

Murad, Inc.’s second line of argument, that the Respondent’s passive holding of the InclusiveHealth.com domain for more than five years showed lack of rights and legitimate interests, also fell flat. Although passive holding of a domain name is sometimes evidence of lack of rights or legitimate interests or registration in bad faith, this evidence hinges on other circumstances also being in place, such as knowledge of a Complainant’s well-known mark and lack of demonstrable plans to use a domain name. As the Respondent argued, “simple passive holding of the domain name by the Respondent should not, in absence of any particular circumstances of the case such as those listed under 4b of the Policy, amount to a finding of use in bad faith.”

The NAF Panel, taking into account that the Complainant did not meet the burden of proof for bad faith registration and use, denied Murad, Inc.’s Complaint.

It can be difficult tackling domain name and social media infringement without the right expertise. Steve covers UDRP cases, URS cases, and all other acronyms and topics related to cybersquatting and usersquatting.